ForexTime FAQ: Your Ultimate Guide to Understanding Trading Terminologies
Trading in the foreign exchange market can be complicated, especially for traders who are new to the game. The jargon used in the industry can make it difficult to understand what is happening, especially when it comes to placing orders or identifying market trends. This article aims to simplify some of the more complex trading terminologies used in ForexTime, a popular forex trading platform, and provide readers with an ultimate guide to understanding trading terms.
What is Forex?
Foreign exchange trading is the process of buying and selling currencies with the goal of making a profit. Trades are conducted in pairs, with one currency bought with another. When a trader buys a currency pair, they are taking a long position and selling means they are taking a short position. The differences in exchange rates are used to place trades, and profits are made based on speculation about the future direction of currency pairing.
What is ForexTime?
ForexTime, also known as FXTM, is a forex and CFD trading platform that provides access to a range of financial instruments, including forex, stocks, and commodities. It was launched by Andrey Dashin in 2011, and since then, it has become a popular platform for traders globally. FXTM provides traders with access to real-time market data and offers a range of trading tools, including technical analysis indicators, trading signals, and expert advisors.
What are the most common trading terminologies used in ForexTime?
There are several terms that traders come across on the FXTM platform, and some of the most frequently used terminologies are discussed below:
A pip is the smallest unit of measure in the forex market. It refers to the fourth decimal point in a currency price, and it is used to measure changes in the value of currency pairs. For example, if the USD/JPY currency pair moves from 105.00 to 105.01, that is equivalent to one pip. The value of a forex trade is calculated based on pip movements, and profits or losses are determined by the number of pips gained or lost.
Leverage is a concept that allows traders to open positions that are higher than their initial investment. It involves borrowing funds from a broker to trade at a larger scale. Leverage is expressed as a ratio, and it is often represented as 1:100, 1:200, or 1:500. For example, if a trader has $1,000 in their trading account and uses 1:100 leverage, they can trade with an investment of $100,000. Leverage enables traders to open larger positions and potentially make more significant profits, but it also increases the risk in trading.
Margin is the amount of money a trader needs to hold in their trading account to open a position. It is expressed as a percentage of the total trade, and it varies depending on the leverage used. For example, if a trader wants to open a $100,000 position in the EUR/USD currency pair with a 1% margin, they need to have $1,000 in their account. Margin requirements can change based on market volatility and other factors.
The spread is the difference between the buying and selling price of a currency pair. It is expressed in pips, and it represents the cost of trading. For example, if the USD/JPY currency pair has a spread of 2 pips, the buying price will be two pips higher than the selling price. Tight spreads are desirable for traders because they lower trading costs.
In conclusion, trading in the forex market requires an understanding of the terminologies used on the platform to make informed decisions. This guide has provided an overview of some of the common trading terms used in ForexTime, such as pips, leverage, margin, and spread. Understanding these terms is essential in managing risk and identifying trading opportunities. It is important to research and understand trading terminologies before opening a trading account on any platform.
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